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How Recommerce Contributes to Sustainable Retail

Technology

Feb 16, 2022 - 6 minute read

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Rafał Imielski Content Marketing Specialist

He has two years’ experience in copywriting, translation and proofreading. His goal is to help people communicate in a concise and understandable way. Rafał is an archaeology graduate who’s fascinated by both prehistoric and modern technologies. 

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The impact of sustainability as a trend is being felt across multiple industries, including retail. As customers grow more and more environmentally conscious, brands have to follow suit. This shift is most visible in younger generations of consumers — according to Thredup’s 2021 report, “45% of millennials and Gen Z say they’re not going to buy from non-sustainable retailers and brands”.

If you ignore this demand, you’ll face a real risk of losing your customer base to your competitors. The traditional business model based on producing and selling as many items as possible won’t satisfy the younger generation of consumers, so as a retailer, you really should start considering all your options. Growing customer awareness of the environmental impact of their buying decisions, coupled with the recent technological advancements and mindset changes caused by the pandemic, has created a perfect storm for the rise of recommerce. While it’s only a part of the much larger movement towards more sustainable practices in retail, it’s definitely one worth taking a closer look at.

The recommerce market is growing faster than most other branches of retail. The aforementioned Thredup report found that resale accounted for only 4% of the total fashion market in 2012. However, by 2020, that number had already grown to 9% and it’s predicted to reach 18% by 2030.

How Does Recommerce Contribute to Sustainability?

Overproduction and short product lifecycles are some of the main reasons for retail’s negative environmental impact. While recommerce is an unlikely option for food retailers, it’s extremely relevant to fashion, which produces 10% of the global carbon emissions. The sad reality is that people are used to throwing away perfectly good items of clothing. The average number of times a garment is worn before being discarded has drastically decreased over the last 15 years. While the relatively poor quality of fast fashion and cheap clothing might contribute to this issue, it’s not the main problem, as customer mentality also plays a part.

When a product has multiple owners over the span of its lifecycle, it becomes more likely that it will be used to the point where it’s worn out. This can have a massive impact when coupled with repairs and better knowledge of how to care for one’s clothes. Hopefully, this trend will lead to a reality where fewer clothes are produced overall. As a result, the number of articles that need to be landfilled or incinerated shrinks, and so does the pollution caused by the fashion industry. Of course, all clothes end their lifecycle eventually, but that can be addressed with recyclable materials and environmentally conscious design.

Buying a pre-owned item of clothing online is much more eco-friendly than producing a new one. According to an independent study Green Story conducted on Thredup’s operations, the carbon emissions, energy demand and water consumption are reduced by around 84%, 88% and 98% respectively. As customers grow increasingly passionate about this issue, retailers simply can’t afford to ignore it. The shift towards sustainability is already happening. The only question is — how are you going to respond to it?

Doesn’t It Hurt the Retail Business?

Traditionally, one of the most common ways for fashion retailers to grow their business was selling more items. That’s why contributing to the growth of the second-hand market might seem counterintuitive. However, a business model based on a never-ending increase of production is simply unsustainable, both for the planet and for keeping your customer base.

The Ellen MacArthur foundation believes that fashion retailers need to find ways of generating revenue that wouldn’t require producing new items. Obviously, this might not be possible for most retailers now, and it’s not something that can happen overnight. Nevertheless, looking at different areas, such as repairs and participating in recommerce might be a good idea for companies to diversify their business, transition to a more circular business model and reach their sustainability goals.

Moreover, recommerce creates good press not only regarding eco-friendliness but also the quality of items being produced. When asked about relationships with luxury brands, the CEO of a large recommerce player, Vestaire Collective, said that the platform is only paying homage to these brands by showing that their products can be resold after several months. If people want to buy clothes and accessories even if they were pre-owned, it’s a testament to their superb quality and timeless design.

At the same time, buying a pre-owned garment is simply cheaper than getting a new one from the store, which opens a whole new demographic. Recommerce is most relevant in high fashion and luxury goods, and it makes certain brands accessible to a different customer segment. First, this means that the secondary market often competes with fast fashion and not the brands whose items it actually sells. Secondly, it creates an opportunity for these brands to access a new group of fashion enthusiasts and turn them into loyal customers.

How Does Technology Shape Recommerce?

There are multiple challenges to overcome when entering the recommerce market. They include the authentication of sold goods, truthful presentation of the items, the organisation of efficient logistics, and creating a user experience that encourages people to both sell and buy items on your platform. While technology can’t single-handedly solve all these issues, it does play a crucial role in the recent rise of recommerce.

Radio Frequency Identification (RFID) and other identification technologies can help brands track a specific product over its entire lifecycle and participate in its lifecycle beyond the initial purchase. Third-party platforms like Vinted and Vestaire Collective are only one side of the coin. More and more brands are trying to set up their own recommerce platforms for the products they sell. Effective identification is essential to ensure buyers are not purchasing counterfeit products.

Various stock management and supply chain solutions can support companies in the recommerce space. While the challenges somewhat differ from the ones faced in traditional retail, a firm control and good visibility of your stock can be even more crucial. A bespoke or customised system can help you manage the complex logistics of a recommerce platform.

Applications play a massive role in the success of the biggest recommerce players. After all, the boom was started by C2C platforms, with brand-driven initiatives from companies like Levi’s and H&M following suit. Levi’s SecondHand allows their clients to drop off their old Levi’s clothes at their stores for redeemable gift cards. The company then professionally refreshes the items, takes photos of them, and lists them in a dedicated web application for future buyers.

Meanwhile, H&M group invested in a start-up called Sellpy which lets users send their pre-owned items in special bags and later receive a share of the price at which the item was sold. The company handles the entire process, which includes sorting, pricing, listing, advertising, payments, and delivery. While a part of the H&M group, Sellpy is not limited in terms of brands, it’s an attempt to diversify their business and invest in sustainability.

The buyers and sellers of pre-owned items are usually regular people who don’t want to sacrifice too much time interacting with recommerce applications. Creating an experience that’s both convenient and safe for all the participants is crucial to your success. Even if you build a solution for your own, established fashion brand, you will fight for the same buyers who use the C2C platforms, and their standards regarding user experience are sky-high. You also need a way to source, authenticate and evaluate the used garments, and technology can support all these areas. Without a well-designed, user-friendly app, you’ll have a hard time dealing with the competition.

Conclusion

The recommerce market is growing rapidly, and it’s not going to stop anytime soon. This trend is part of a wider sustainability-focus that’s present in virtually any industry, not only in retail. In addition to the positive impact on the environment, customers also enjoy the availability of high-quality products at lower prices. Retailers need to find a way in which they’re going to approach this market trend, whether it’s building their own platforms or collaborating with existing players.

A well-designed app is a central pillar of every successful recommerce venue. It’s a highly competitive, customer-centric market, which makes a flawless customer experience a necessity. Creating a convenient application that people actually want to use is one of the most important factors for long-term success in this area of retail.

For more information on how the smart use of technology can help your retail business stay ahead of the pace of change, download our industry report: “Top 5 Retail Tech Trends for 2022”.

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Rafał Imielski Content Marketing Specialist

He has two years’ experience in copywriting, translation and proofreading. His goal is to help people communicate in a concise and understandable way. Rafał is an archaeology graduate who’s fascinated by both prehistoric and modern technologies. 

See all Rafał's posts

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